Editorial: Balanced spending cuts with revenue

With unemployment stuck at 7.9 percent, the U.S. economy can ill afford $85 billion in across-the-board spending cuts to take effect as scheduled March 1 in the so-called “sequestration.” Nor can the nation afford the accompanying cuts to defense. On Sunday, Defense Secretary Leon F. Panetta said they would “damage readiness.”

President Obama’s call Tuesday for an interim deal that would put off sequestration, pending a broader long-term deficit-reduction plan, is welcome and overdue. Republicans in Congress had all but accepted sequestration, out of their professed desperation for any spending cuts. The president cannot responsibly let that happen, especially in the wake of a report showing that defense spending plunged in the last three months of 2012, dragging the economy down a bit with it.

What was missing were specifics: Exactly what would the president put in the smaller package of spending cuts and tax reforms that he proposes? He doesn’t want to present a detailed plan before the GOP agrees to deal on his terms. House Speaker John A. Boehner, R-Ohio, doesn’t want to talk about a short-term deal that includes any new revenue.

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Boehner has half a point when he says that the House has already passed budget cuts in the last Congress that would replace sequestration without more taxes. Given that sequestration deals only with spending, it does not strike us as unreasonable in principle that it be replaced for a few months by a more balanced mix of spending cuts, as long as this really is the prelude to a long-term deal that raises revenue as well.

How to get the two parties from here to there is a challenge, to say the least, but Obama may have contributed Tuesday in two ways. First, he rhetorically de-escalated the drama, saying that he and Congress should “keep on chipping away at this problem together, as Democrats and Republicans.”

Second, he indicated that the combination of entitlement cuts and revenue-raising through tax reform that he and Boehner discussed during their year-end “fiscal cliff” negotiations is “still on the table.” No doubt some in the speaker’s party, having seen previous grand bargains fail, or believing that their embrace of sequestration has given them leverage over the president, will be tempted to dismiss Obama’s overture. But it would be a tragedy for the country to leave it untested.

The reason was laid out clearly Tuesday by the Congressional Budget Office. In its latest report on the nation’s fiscal health, the nonpartisan office reported that deficits will decline through 2015. But an aging population and rising health care and interest costs will propel the national debt higher soon thereafter to 77 percent of the economy by 2023 and rising. This would have “serious negative consequences,” the office noted, which is putting it mildly, and yet another reason for the president to take the lead.